Lesson 1: Attacking capital does not produce recoveries

posted at 11:14 am on April 6, 2009 by Ed Morrissey

After spending the last few weeks rabble-rousing over compensation at companies that receive TARP funds, the Obama administration has quietly reversed course. Now that Barack Obama needs partners in the private sector to unload toxic assets, the White House has begun creating work-arounds for compensation caps passed by Congress in the heat of AIG retention bonus outrage:

The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.

Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.

The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.

The news isn’t all good here. The White House wants to pick its winners and losers:

Although some experts are questioning the legality of this strategy, the officials said it gives them latitude to determine whether firms should be subject to the congressional restrictions, which would require recipients to turn over ownership stakes to the government, as well as curb executive pay.

This represents quite the sea change from Barack Obama’s “shaking with outrage” position, two days after the AIG bonuses became the focus of the national media. Instead of focusing on the incompetence of the Treasury to account for the bonuses — which Tim Geithner protected via Chris Dodd in the omnibus spending bill — Obama and his allies stoked populist fervor by demonizing AIG’s execs, most of whom had only come to work at the Financial Products division after the collapse, and whose bonuses kept them from looking at better jobs with more of a future than the soon-to-be shuttered AIG-FP. Congress pilloried Edward Liddy, who only gets $1 for his efforts to right AIG, and passed a blatantly unconstitutional bill of attainder that taxes all TARP-related company bonuses at 90%, making them effectively worthless.

That certainly got the attention of the very firms that Obama needs to invest in worthless mortgage-backed securities (MBSs) in order to shore up the financial markets. TARP funds will subsidize those transactions, which means that the new tax will affect all the employees of firms that participate in the program. If the risk make the TARP MBS program iffy, the new taxes made it untouchable. Now they want to start punching loopholes in the law, but only to the degree that they get to reward the people they like.

How legal is that? Analysts are laughing at the prospect:

Legal experts said the Treasury’s plan to bypass the restrictions may be unlawful.

“They are basically trying to launder the money to avoid complying with the plain language of the law,” said David Zaring, a former Justice Department attorney who defended the government from lawsuits involving related legal issues. “They are trying to create a loophole to ignore Congress, and I think the courts will think that it’s ridiculous.”

It will be a toss-up to see which effort the court finds more ridiculous — the bill of attainder passed by Congress with Barack Obama’s explicit endorsement, or Barack Obama’s hypocritical efforts to undermine the law he demanded in the first place. It’s Keystone Kops at Treasury, Capitol Hill, and the West Wing.

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If you want to participate in this once in a life time profit making opportunity, get your kick backs in now. Do not wait and discover that you are on the bottom of the list when special package deals are handed out.

By the way – I love that Obama had the idea to come up with front companies for sending the money to the financial institutions. What’s it called when other organized crime does that? Money laundering?

Wait for it….Ah there it is…”Grown ups are in charge”…
hahahaahhwahhhahahahahahawahh,yes that maniacal cackle is me laughing and crying at the “geniuses” we have in the administration. 2010 & 2012 cant come fast enough.

At first, when the initiative was being developed last year, the Bush administration decided to apply executive-pay limits to firms participating in this program. But Obama officials reversed that decision days before it was unveiled on March 3 and lifted the curbs, according to sources who spoke on condition of anonymity because the discussions were private.

So, Bush was in favore of further throttling the Free Market, and Obama was firmly in favor of making sure his cronies got paid.

Turbo Tax Timmy Geithner wants to be the Red Queen when it comes to bank CEO’s. Is he just a Red or a queen also?

A chaotic confused message(s) from government will do nothing to engender confidence, in their competence, any contract they sign, any law they make.

Without trust and a stable background of law and expectations, people will stay very risk averse and there will be no or limited recovery.

Bama can threaten people with “the pitchforks” all he wants. He can’t get to enough of us to make a recovery happen if he doesn’t change direction. And he won’t, due to ideology and the interest groups he serves.

Barack Obama & Tim “Loot the Treasury” G-man will long be dead & buried before the companies they are trying to screw up. Capitalism will survive this pathetic attempt by Obama and his merry band of thieves. Re-distribution will happen as we pluck it back from those who are trying to take it now. Obama & his henchmen (not very good ones) are not smart enough to really take and give to others. Only really really devious and underhanded capitalists can do that.

Team members compete for the title to see who can go bankrupt first as they pay their neighbor’s mortgage and their own randomly-increasing taxes as they spend through their show-assigned nest eggs and borrow way beyond their means!

Let’s ask junior high students taking a course on U.S. government whether this makes any sense. I’m confident one smart-aleck will correctly note, “It’s as if a parent tell a kid not to smoke pot, and then lights up a joint.”

Of course, the MSM continue hibernating as blaring alarms go off all around them.

I think it’s time we all stop rearranging the deck chairs on the titanic and do something…. Action anyone? Anyone? What a bunch of boobs. Too bad they all think they have so much power so as to loot and pillage the people with reckless abandon. As we move toward a Constitutional course correction, I suggest we focus on debarking and setting adrift these tools in a leaky dinghy.

A deal’s a deal — unless you’re dealing with the Obama administration or a Democrat-controlled congress. The business world will figure this out soon enough. Some will play the banana republic game, most will walk away from the stacked deck.

I’m sure FOO (Friends Of Obama) will tend to be allowed to pay (and receive) bonuses, while FOE (Friends Of Enemies) will tend to have bonus rules enforced tightly.

But hey, what could go wrong when the government picks winners and losers?

This is going to result in a corruption scandal that may very well destroy the democrat party when all’s said and done.

You have hundreds of billions of dollars. You have the government setting up essentially “no risk sweetheart deals” to unload these assets. The same government is run by a party that eats drinks and breathes corruption.

What could possibly go wrong?

Some politician in this is going to steal so much money as to make Madoff look like an amateur.

Everything Obama says dances on the edge of a razor blade. When necessary, it falls off the edge of that blade never to be referenced by the MSM again. None of his past statements conflict with present statements because they never existed. See how easy that is.

Everything Obama says dances on the edge of a razor blade. When necessary, it falls off the edge of that blade never to be referenced by the MSM again. None of his past statements conflict with present statements because they never existed. See how easy that is.

What’s worse: the unconstitutional tax law passed by congress (the ringleaders of this should all be put in jail, for THEY are the ones that got us into this mess), or the Obama-Geithner money laundering that they are using to get around that unconstitutional law. They are all corrupt. It’s just good cop, bad cop to take control of everything they can get their hands on.
What can we do?Tax Day Tea PartiesTerm Limits
Get Out The Conservative Vote 2010

Everything Obama says dances on the edge of a razor blade. When necessary, it falls off the edge of that blade never to be referenced by the MSM again. None of his past statements conflict with present statements because they never existed. See how easy that is.
SKYFOX on April 6, 2009 at 12:02 PM

That system works perfectly fine when you’re dealing with an illiterate mob. But the guys who wear green eyeshades and count the beans keep their own records. They don’t care all that much what the rules are; they just want the rules to stay the same for more than a few days in a row.

By removing all consistency from the economy, Obama is turning America into a Chinese-style kleptocracy. Business planning is being replaced by political connection. There are a few hundred people on the inside, and a few thousand people who THINK they’re on the inside of the decision-making process.

Aside from that tiny group of powerbrokers and would-be powerbrokers, pretty much everybody in America who has money is building himself a bunker right now.

The term toxic assets carry a connotation of worthless. Who would want to purchase a worthless asset? High risk, not immediately of high value or asset worth 10% to 50% of their formerly purchase price are for sale to highest bidder might describe the situation better. The “stimulus” should be intended to bridge the chasm created that could swallow the solvency for the current holder of the troubled asset. It is perceived that meeting present obligations of doing business as normal is important to the economy. It assumes an already existing and competent business market entity that can be saved exists and will immediately provide the continuity needed to avert severe economic consequences of insufficient funds being available to conduct day to day business. It also assumes the rules that caused the problem will be changed to ensure the situation is not repeated and provide the proper oversight to verify the rules are followed and have a verifiable paper trail for public examination.
To date zero transparency prevails and the world is in the dark when the sun should be coming up. Stink is in the air as trillions of dollars float toward the cesspools of secrecy and corruption. Who, what, why, when, where, and how? Questions never answered.

I tohught he was a socialist marxist who wanted to “destroy” rich people?

DeathToMediaHacks on April 6, 2009 at 12:31 PM

He is and then reality hit him square in the face and he realized that he would be the one holding the ball when the economy REALLY took a dive. Then he decided to act all socialist for his base while passing money to people who actually do the work on the hush hush. Not hard too understand. It probably KILLS him to have to do it too. Heh. He’s such a noob.

National Socialists love Corporations and rich people, when they control the corporations and they get rich off the loot. Socialism for the rich, and stringent capitalism for the middle class, and free benefits for the poor.

You know, I thought one of our rights was the “pursuit of happiness.” I guess I always thought that meant that you could be as successful as you wished, as long as you played by the legal rules. It seems our Dear Leader wants us to not be too successful, because making money is evil. But now he also wants to determine who can be successful, cause face it, even he needs backers with lots of money. (at least when I’m laughing hysterically, I’m not really depressed, am I?)

After spending the last few weeks rabble-rousing over compensation at companies that receive TARP fundslaundering the taxpayers’ money into massive payoffs for his political cronies, the Obama administration has quietly reversed course.

Whats interesting is that these “toxic assets” represent Real property. Real land, real houses. Even when a house gets foreclosed on, it still exists… it still has value…. Someone is going to make a killing on this… and its all going to end up being Geithners friends….
Romeo13 on April 6, 2009 at 12:53 PM

Obama is slavering over that money, but the “Lightworker” won’t take the blame for foreclosing on a million homeowners.

The LAND always had appreciable value. The “toxic assets” were the LOANS themselves – marketed as a separate commodity. Even without Mark to Market, it’s going to be really hard to unload that bogus paper. Even at pennies on the dollar, investors are going to want to just cherry-pick the few remaining good loans out of the sludge.

Obama’s plan is to unload all this stuff, with some short-term restrictions on foreclosures and long-term restrictions on interest rates. AFTER that, he’ll pull the chocks out from under the inflation train so the homeowners will be able to pay their mortgages on a minimum wage income.

It’s a win-win situation for everyone involved. Except of course for the people who take Obama at his word. But let’s face it; whose fault is that?

I tohught he was a socialist marxist who wanted to “destroy control” rich people?
DeathToMediaHacks on April 6, 2009 at 12:31 PM

FIFY
dominigan on April 6, 2009 at 1:29 PM

Either one works perfectly fine. It’s been 60 years since the Socialists and Fascists were at war with each other. Now, for all practical purposes, the world’s collectivists are just one big, unhappy family.

The US can’t be a banana republic (one because that’s a TM company not yet receiving a bailout from the US; and two, that would make the President the Chief Banana, and because he’s half black, it would associate an African American with a banana and a republic which is RACIST). So go to your rooms without dinner, any calling this man and this republic banana associated.

Lesson 2: Attacking people for questioning Wall Street only
turns their anger up.

You can only defend Goldman Sachs, AIG, and such for so long before people see right through it. You can only demonize Detroit so much before Cloward-Piven describes your actions completely.

That’s what’s being heard from Wall Street as people hear of their lack of accountability to the nation. It doesn’t matter if it’s Soros or Santelli. Both of them have the proverbial blood on their hands. Santelli for defending AIG’s no-renegotiate bonuses while Detroit gets raked through the coals. Soros has blood for any *provable* influence he has(not counting Horowitz’s delusions). The people are asking for Wall Street to stop acting as if they were “petulant children” who act as if they were masters of the universe.

We can reconcile our nation or let folks run interference for Wall Street. Eventually the former will happen when the latter can no longer be done. I hope that moment comes as soon as possible.

It will be a toss-up to see which effort the court finds more ridiculous — the bill of attainder passed by Congress with Barack Obama’s explicit endorsement, or Barack Obama’s hypocritical efforts to undermine the law he demanded in the first place.

Exactly, or “un-Constitutional” may be a better word than “ridiculous”. And while I initially supported TARP, the more I learn about how it’s being implemented, the more it reeks.

Sock puppet definitely lacks the ability to plan ahead. Reviewing his entire political career it’s obvious that if he didn’t have the left wing scumbags dressing him up in Chicago his political career would have been limited to helping people die of mesothelioma from inhaling asbestos in the slums of Chicago.

We’re not only suffering from his complete ineptitude and idiocy, we’re also and even more so suffering from the corrupt cretins he has working to move the agenda he adopted from his handlers. He doesn’t have a plan, he only skims along taking bad advice from the people that pull his strings.

We know it is wrong, and are astonished that no one is doing anything about it!

Seven Percent Solution on April 6, 2009 at 2:09 PM

Suggestions? Yes, I’m starting to feel that while the Tea Party movement is a well intentioned thing – it’s not going to be enough to change anything in Washington. In case no one has noticed, they aren’t listening to us.

lenin i mean obama will make a great dictator and a rotten president.what he is doing is what lenin done in 1917.why don’t you robot libs think for your self stop letting obama think for you read the history of russia .grow a brain